so after an awful week on wall street, the market makes a furious rebound on monday -- the biggest one day gain ever. guess the government has finally fixed everything?
don't count on it.
no one is saying that the government can't make a substantial difference in this mess. they will, and in the process, they will create winners (mostly wealthy friends of the powerful) and losers (nearly everybody else). when the progress seems to stall, they will insist that what is needed is more intervention. and the problem will drag on and on. for a recent example, take a look at what happened to the japanese in the 1990s (here and here), where a similar economic crisis and series of government 'fixes' led to a lost decade in which economic expansion came to a complete halt.
they say that those who don't learn history are doomed to repeat its mistakes. how can we walk right into the buzz saw? unfortunately, our political leaders (and perhaps the majority of the american public) can no longer face the prospect of a painful readjustment -- the public, because we're used to living well beyond our means, the politicians, because they'd probably lose their jobs if they were perceived as not doing enough in the midst of a crisis. and since long-term problems end up being someone else's problem, they'll act, even though the long-term results are very likely problematic (cf. the unwillingness to tackle the problems in social security and medicare).
the neo-cons tell us that the great threat and challenge of our generation is militant islam. but i think that the greater challenge is internal. we are looking at a lot more than a crisis in the economy. we're looking at an american identity crisis.